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It is a good time for threat evaluation as we head into a new year and decade. As executives, it is our job to determine the veracity of each threat and take action to mitigate each one. There are varying threats everywhere; some are real and some are imagined. A real threat is where serious danger lies, danger that challenges the core of your existence. An imagined threat (a non-threat) just makes business more difficult to conduct. Below are my top real and imagined threats facing the building supply industry in 2020.

Real Threats
1. Too much debt: Recession signs are flashing red and there is a debt bomb that is poised to go off in America. Crushing federal, corporate, and household debts are being ignored because there are no easy or quick answers. So-called experts are trying to justify these huge debt numbers with a “nothing to see here” attitude. Well, there is something to see and it won’t be pretty. Eliminate your debt in 2020.

2. Trade wars and China: The 1930s is real-world proof that trade wars have no winners. Supply disruptions, higher pricing, and the erosion of the Chinese manufacturing brand could disrupt huge segments of the industry. If trade tensions continue to escalate, the “Made in China” brand could be further maligned. There is one aspect of the trade war that politicians don’t understand. Tariffs might force manufacturing to come back to America, but if the product cost 40% more to produce, consumers won’t buy it; and the great downward spiral begins. Next year, expand your sourcing of products beyond Chinese goods.

3. Housing affordability: Between the lenders, lawyers, land developers, and the government, the “golden goose of housing” has just about been defeathered. With the current national average for a new home costing around $388,000, most Americans will never have an opportunity to own a home. There must be a clear path for housing affordability, or the industry will face systemic long-term risk. Housing starts must grow at levels that support the population. In 2020, grow product and service offerings to expand your customer and builder base.

Imagined Threats
1. Your competitor’s newfangled strategies: Expect to see your competitors roll out new strategies for growing their businesses. Desperation and debt are an ugly combination that will force companies to try some oddball strategies. Just because your competitor thinks it’s a gold-star plan to grow his business does not make it good for you. Get ready to ignore a lot of bad ideas.

2. Presidential election year: There will be hype from all sides that if their candidate doesn’t win, the world as we know it will collapse. As a businessperson, don’t believe the propaganda from either side, and there are no advantages to alienating half of your customer base by getting entrenched in politics. The country will survive no matter who wins, so focus on running your business.

Imagined threats can be easily overcome. Identify your real threats by asking, “What can fundamentally harm my business in the long term?” Executives should focus on the real threats, take care of their businesses, go back to sound business fundamentals, and keep
their heads down.